Hydrothermal liquefaction is a process commonly used for the production of crude bio-oils from lignocellulosic materials and algae. In hydrothermal liquefaction, the thermochemical reactions generally occur in an aqueous environment at temperatures above 250° C. and pressures of approximately 3000 psi for approximately 2-3 hours. The oil produced via hydrothermal liquefaction is primarily formed by products of lignin depolymerization reactions. The products from cellulose and hemicelluloses are soluble in water and, as such, are lost in the aqueous phase. If not recovered, the water soluble organic compounds may contribute to pollution. Separation of the bio-oil from water generally involves distillation, which is an energy-intensive process. It is, therefore, desirable to provide a process and system that remedy the defects of the previously known methods.